ACA Upheld In The Highest Court

September 16, 2016

In 2010, The Patient Protection and Affordable Care Act was signed into law by President Barack Obama. Coined “Obamacare,” the Act will be listed at the top of the President’s domestic accomplishments as the most significant Federal reform of the healthcare system since the enactment of Medicare and Medicaid in the 1960’s. Created in order to increase both the quality and affordability of health insurance in the United States, the Federal statute has decreased the uninsured rate and the growth rate of healthcare costs to their lowest figures since the early 1960’s

By Erin Hartman, N’18

The Act prohibits insurers from denying coverage based on pre-existing conditions, extends the period in which young adults may be covered by their parent’s plans, closes the Medicare Part D “donut hole” which creates a gap in coverage at high costs, and adds mandatory complete coverage for most preventative services. In reaching its goal of covering all Americans, the statute created a health insurance marketplace where individuals and families have access to consolidated factual information on an array of private plans they can choose from. Obamacare created an “employer mandate”, requiring large businesses to provide coverage for their employees at pre-tax prices. It provided for the provision tax credits for small businesses who provide their employers with health insurance. In addition, under the Act, Medicaid was expanded to cover up to 133% of the poverty line, a drastic expansion that provided many low-income families and individuals with state-funded insurance they previously did not qualify for. Obamacare has irrevocably changed the health insurance market, drastically increasing those who are covered through each of its programs and by penalizing, through per-month fees, those who did not seek insurance through this expansion process. The statute is hailed by many as a necessary first step in repairing the nation’s healthcare system. However, its enactment did not come without a fight including various state appeals and a Supreme Court case that challenged its existence.

National Federation of Independent Business (NFIB) v. Sebelius

The National Federation of Independent Business v. Sebelius was brought before the Supreme Court in March of 2012 and challenged the constitutionality of the “minimum essential coverage” provision and the expansion of state-based Medicaid. The “minimum essential coverage” provision requires most Americans to hold a minimum level of health insurance coverage by the year 2014. These individuals and families, who previously did not have insurance, had the expanded opportunity to obtain it through the extension of Medicaid, newly mandated employer-sponsored health plans, or the streamlined health insurance marketplace. Those who did not comply were required to either get an exemption or pay a per-month fee on their Federal income taxes. The expansion of Medicaid was challenged based on the grounds that it was unconstitutional for the Federal government to require states to extend their coverage without adequate notice. Starting in 2014, the expansion required states that chose to participate in Medicaid, which was all states at the time, had to cover all people under 65 who do not qualify for Medicare, who are not enrolled in private insurance or participating in the market, and who are at or below 133% of the poverty line. Since its beginning, Medicaid is financed by the state with the Federal government matching the state’s contribution dollar-for-dollar in most cases. To finance the expansion, the Federal government was going to cover 100% of the costs in most states for the first two years and gradually decrease its contribution after 2016. If states did not individually comply with the expansion, they would lose all Federal funding. Although the Constitution allows all powers not granted to the Federal government to be allocated to the states, the Federal government still holds certain conditions over the grants that it may provide to the states.

The “minimum essential coverage” provision was found to be constitutional by the Supreme Court in June of 2012. The Court held that requiring individuals to obtain health insurance is essentially a tax and therefore is constitutional and within the powers of Congress. It was found to be a tax because it was justly levied on all people and created a social benefit. The Court found that the individual mandate penalty served as more of a tax than a penalty and was therefore under the jurisdiction of the Federal government. It was found that individuals were left with a rational and feasible choice between payment of insurance or a fine, and that the notion of taxing “inactivity” is a legitimate power of the branch. In summary, the mandate is covered under Congress’ ability to “lay and collect taxes.”

Ultimately, the Court only issued a decisive opinion on the individual mandate. However, the Court did voice its opinion on the Medicaid expansion provision. The Court found the mechanism of forcing states to expand Medicaid or lose all federal funding for the program to be unconstitutional. It was found to violate the 10th amendment, which supports the “federalism” principle and thus limits the Federal government to powers only specifically stated in the Constitution. Described by the majority opinion as a “gun to head” scenario for states, it was found that the funding withholding provision is “unconstitutionally coercive.” The majority did not find that the expansion should be overturned, but asserted that states must be given the right to opt out of the expansion without losing the Medicaid funding that was formerly provided to them. In this opinion, the expansion was upheld but with the caveat that it must be optional for states. The jurisdiction to determine if and how to expand Medicaid was handed back to the states.

The first provision, which was upheld by the Court, could have eliminated the ACA all together if it was struck down, since a large fraction of the statute balanced and relied on the individual mandate and its subsequent penalty. After consensus of the Court in June 2012, it was proclaimed that the “ACA is here to stay!”

PENN WHARTON PPIRESOURCE SPOTLIGHT:

<h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>The Penn World Table</h3><p> The Penn World Table provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for some or all of the years 1950-2010.</p><p><a href="https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form.php" target="_blank">Quick link.</a> </p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>National Center for Education Statistics</h3><p><strong><img width="400" height="80" alt="" src="/live/image/gid/4/width/400/height/80/479_nces.rev.1407787656.jpg" class="lw_image lw_image479 lw_align_right" data-max-w="400" data-max-h="80"/>The National Center for Education Statistics (NCES) is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations.</strong> NCES is located within the U.S. Department of Education and the Institute of Education Sciences. NCES has an extensive Statistical Standards Program that consults and advises on methodological and statistical aspects involved in the design, collection, and analysis of data collections in the Center. To learn more about the NCES, <a href="http://nces.ed.gov/about/" target="_blank">click here</a>.</p><p> ﻿Quick link to NCES Data Tools: <a href="http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4" target="_blank">http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4</a></p><p> Quick link to Quick Tables and Figures: <a href="http://nces.ed.gov/quicktables/" target="_blank">http://nces.ed.gov/quicktables/</a></p><p> Quick link to NCES Fast Facts (Note: The primary purpose of the Fast Facts website is to provide users with concise information on a range of educational issues, from early childhood to adult learning.): <a href="http://nces.ed.gov/fastfacts/" target="_blank">http://nces.ed.gov/fastfacts/#</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>